Living in California, I’m currently spending 56% of my income on rent. Most financial advisers say you shouldn’t spend more than 30%. Apparently this qualifies me as “severely cost-burdened,” according to the California Budget & Policy Center.
However, I’m extremely lucky that I’ve kept my job so far since the start of the coronavirus (COVID-19) pandemic. When rent was due on April 1st, I could pay it. Sadly, many others couldn’t.
Rent is often one of many bills due on the first of the month. The stress of losing hours or suddenly being unemployed is leading many people to seek immediate sources of cash, and this nightmarish outbreak is a dream for many scammers and predatory lenders.
Whatever you do, do not take out a payday loan.
These loans are quick, easy to get, and are repaid on your next pay day (hence the name). You don’t even need a credit check, and can walk out with the loan in a just a few minutes. What they won’t tell you is that your loan is typically saddled with an annual interest rate of 400% — or more.
What seems like an easy solution to financial stress can leave you owing far more than you originally borrowed, and often starts a vicious cycle that’s hard to break.
So you’re faced with rent, utility bills, and more. If you can’t take out a payday loan, what should you do?
Thankfully, there are alternatives to these predatory loans. The best option may be to approach your bank or loan servicer directly, as many have special offers for consumers affected by COVID-19, such as deferred payments or waived overdraft fees.
There are many resources with tips on how to negotiate with your bank and what to do if you can’t pay rent. These days are scary for most of us, myself included, we need to support each other now more than ever. Do you have other tips on how to address bill payment challenges? If so, please comment below.